A look at home options after the wildfire

A wildfire that’s been described as the worst in the last century came raging from the National Park’s Chimney Top area just a little over a month ago. With so many displaced, it has left us with a real estate nightmare.

Evaluations have determined more than 1,100 properties were destroyed by the wildfire and about as many were damaged in some way in Sevier County.

It is times like this that we recognize the incredible value of human life and the sweetness of each day that we arise to see the sun and smell the coffee brewing. The toll on human life is 14 at this point. Every life is incredibly precious and no words can ever adequately describe the grief, nor can any words ever feel rich enough when we attempt to comfort out friends and family.

But even in times of tragedy, we retain our hope. Resilience and confident resolve is what we heard out of the community leaders, from the mayor of Gatlinburg to the pastor of Roaring Forks First Baptist Church to the mom digging through the ashes to find any keepsake that might have survived. All were looking forward and not backward. All were celebrating the lives that were saved and concentrating on the things that matter: we have each other.

As a REALTOR, my phone began to ring with one caller after another telling me of the house I had sold them. Many of these were second homes, cabins that were to be their ticket to retirement. Now those homes are gone.

“What do we do now?” was the question uttered over and over again with each new call.

I always say there is some silver lining in every dark cloud and I am looking for it now.

Here are some things we can expect. Insurance adjusters will be working day and night for another few weeks to determine property values as they assess the damage from the wildfire. Most of the properties will be covered by some kind of insurance, but many insurance policies will not cover actually replacement. This means that not all of the destroyed structures will build back. Decisions will be made as to whether to just pay off the mortgage (if there was one) and buy an existing home, rent for a short time while life is being sorted out and healing is beginning, or build a new structure on the existing lot.

BUYING A NEW HOME

Buying a new home will probably seem the best route for some who lost their home in the wildfire, so it’s important to understand the challenges before making a final decision. Inventory of total homes in Sevier County for sale is a bit low so those choosing to buy may find they do not have as many homes to choose from as they would like. It may be necessary to move further out of the area and commute. Purchase prices of existing homes are still generally lower than the cost to build new, however. So it might be a win to find an existing home. Each homeowner who has lost a home in the wildfire needs to examine his or her insurance policy to understand the pros and cons of the options offered. Due to inventory shortage, I would suggest that you contact a real estate agent as soon as you can and begin looking at what might be a possible home for your next season.

I would also encourage you to contact a lender and discuss your situation. Ask them about their best lending products. There are a number of loans at this time that do not require any down payment for a very low down payment. Interest rates are also very low, so you will be pleasantly and possibly surprised at the monthly payment. All of Sevier County qualifies for what’s called a rural development loan, which is a government backed loan that doesn’t require any down payment. Another loan that might be needed to give you more options is a rehabilitation loan. It allows you to borrow more than the price of the house in order to remodel or add onto it. This might be necessary as you may not find the exact property you were looking for and you would desire to make adjustments to it. It could even allow you to consider a property that would be an overnight rental cabin or chalet without, say, a garage or storage or a kitchen that is satisfactory but in every other way met your desire. You could borrow enough to cover the price of the home and the changes you want to make. This would allow you possibility of opening up your search. This way, you would have a house to live in while you make it a true home that meets your needs.

If buying a new home isn’t the right option, you do have other choices.

RENTING

Another option you can consider – and we are asking our sellers to make this option possible – would be to place an offer on a home with a stipulation that you can occupy it immediately while you are completing the insurance claim on your home, and while you are possibly also applying for a loan. In real estate lingo, this is called early occupancy. You are allowed to move into the house that you were buying as soon as you have a binding contract. You go ahead and place the utilities in your name the seller keeps the insurance on the building intact and you keep insurance on the contents during the occupancy time. Depending on how the seller is situated financially, they may be able to waive a monthly fee for this early occupancy. Sellers are particularly inclined to do this when they have received a generous offer on their house. And in some cases they will have a mortgage and would not be capable of allowing of allowing you to occupy without asking for a monthly fee and it would be treated like rent or it could be placed against the purchase price and you would receive a credit. There are a number of ways to approach this. You can depend on a good realtor to guide you in this process.

Those choosing to rent will also find that the number of rental properties available is really slim in our area. You might consider checking into overnight rental companies and see if they have any houses that would do month to month leases. RV parks have become popular for those who are not quite ready to build or buy so they temporarily house themselves in their RV. Perhaps a road trip would be a positive way to get some perspective if you can work from the road or are retired. Perhaps Sevier County individuals who have RV’s sitting in their drive ways would consider renting it to those of us who need some months of temporary housing/shelter? Or it might be possible to purchase one and place it on your lot while you build back.

REBUILDING AFTER THE WILDFIRE

If after looking at your options and your insurance plan it seems that the very best option for you and your family is to build back, then here are some things to keep in mind. It’s important to understand that you may not be able to build back exactly what you had before the wildfire. You’ll want to check into this before you get too far down the road. The reason is that we have had many code changes, particularly in relation to fire codes and so the house that burned may not in today’s world meet regulations. You will want to know whether you are grandfathered in or whether changes will need to be made. You’ll also want to know what type of permit you had for your septic if you were not on a sewer.

Get a diagram from the health department of your septic field line. You may find that your septic system was not permitted for as many bedrooms as you had. This was very common in Sevier County until just a couple of years ago. Before then, when a home was sold the seller and agent were not required to advertise the number of bedrooms it was permitted for, so this discussion may not be something you had at the time of purchase. The good news, however, is that it is possible to increase your field lines and to increase your capacity for your septic but it is something you will want to check into before you get to far into the rebuilding process. Have a geologist check out your foundation and see if it is going to need to be replaced or whether you can build back up on it.

We have many good builders in our area but due to the devastation of the downturn in the economy we lost much of our contractor industry, so we do not have enough licensed builders to handle what will be necessary to restore our area so this will be a challenge. In the last few weeks I have met with builders who are preparing to ramp up their construction companies, who have built many, many Sevier County homes in the past. They will be very well connected and able to handle many projects. You do want to be very, very careful as to whom you choose as a builder. There are so many horror stories and many ways that building can be a heartache (or maybe just a headache). You will want to be careful that you do not go with in a “fly-by-night” operation or get involved with anyone coming into the area looking to take advantage of the situation so be careful. Feel free to call our office and get a list of contractors that we have done business with, contractors who have a superb track record that we would be able to endorse. It is also going to be a challenge to build back in that it is more expensive to build then where the current market pricing for existing homes is, so you will need to find creative ways that do not negatively impact the pricing structure of what you’re building to get it into budget.

So I am sometimes asked, “What is the value of building back?” That’s a fair question. We do not expect that the majority of individuals will pursue the construction process so those who do need to have the very highest property value if they were to resell it. It will be important to evaluate your area as well. Are there going to be buildings restored around you, or are you going to be located amid a wasteland of foundations? What type of quality will you have around your new construction?

If you choose to sell your lot (or land depending on all the factors mentioned above) will it produce value? I would expect that many areas will have an abundance of lots, and that will in turn drive down the price. You will also want to consider if you are in an HOA whether it will require that you continue to pay a monthly fee. Will they require that you remove foundation and debris? These are all expenses and consideration should be given to those questions. You will also be paying property tax on your vacant land. With as much property as we have lost in the wildfire, there are not going to be a lot of buyers for your land at premium prices.

One little side note: it’s worth thinking about how many of us now have wide open views previously blocked by many beautiful trees. Though we are saddened that we have lost so much beautiful vegetation, nonetheless we now have a knocked down crazy good view. I would recommend that you plant vegetation that will control erosion but that would not block future views. For example, indigenous plants like rhododendron, Mt. Laurel and Hemlock, dogwood , and holly are all plants that don’t grow high or don’t mind being trimmed.

Whatever your decision, we are here to help you through the process. If you are looking for a new home, we can take you to see what’s on the market. If you are looking for a place to rent, we can put you in contact with people who can help you find a place. And if you lost your home in the wildfire and want to build back, feel free to contact us also for a list of cabin builders that we consider highly.